Economy

Buhari Asks National Assembly to Approve Additional N2.5 trillion For Petrol Subsidy in 2022

Published

2 years ago

February 16, 2022

The President of Nigeria, Muhammadu Buhari has requested for the inclusion of N2.557 trillion as an additional petrol subsidy payment in the 2022 budget.

Buhari sought approval of the amendment of the 2022 budget to accommodate more spending, presenting the request in a letter to the National Assembly.

The letter was read by the Senate President, Ahmad Lawan on Tuesday during the plenary session of the Senate.

In the letter, the federal government had requested for an 18-month extension for the implementation of the petroleum industry law.

Investors King reports that if the legislature approves the proposal, the government will keep fending for subsidy payments on PMS, which gulped N1.4 trillion in 2021.

“It has become necessary to present this amendment proposal considering the impacts of the recent suspension of the Petroleum Motor Spirit (PMS) subsidy removal and the adverse implications that some changes made by the National Assembly in the 2022 Appropriation Act could have for the successful implementation of the budget.

“Following the suspension of the PMS subsidy removal, the 2022 Budget Framework has been revised to fully provide for PMS subsidy (see Schedule V). An additional provision of N2.557 trillion will be required to fund the petrol subsidy in 2022. Consequently, the Federation ACCOunt (Main Pool) revenue for the three tiers of government is projected to decline by N2.00 trillion, while FGN’s share from the Account is projected to reduce by N1.05 trillion.

“It is important to restore the provisions made for various key capital projects in the 2022 Executive Proposal (see details in Schedule l) that were cut by the National Assembly,” the letter read.

The letter further stated that amendments in other sectors like power, water, infrastructure, economy are essential to enhance ongoing projects that are cardinal to the administration, and those almost completed do not suffer a setback due to reduced funding.

Detailing the extracted earmarks, it stated, “It is equally important to reinstate the N25.81 billion cut from the provision for the Power Sector Reform Programme to meet the Federal Government’s commitment under the financing plan agreed with the World Bank.

“In addition, it is necessary to reinstate the four (4) capital projects totalling N1.42 billion in the Executive Proposal for the Federal Ministry of Water Resources that were removed in the 2022 Appropriation Act.

“Furthermore, there is a critical and urgent need to restore the N3 billion cut from the provision made for payment of mostly long outstanding Local Contractors’ Debts and Other Liabilities as part of our strategy to reflate the economy and spur growth (see Schedule I).”

President Buhari, in his proposal, noted that N106 billion provided in the supplementary bill would be used as capital expenditure and N43.87billion would be spent on recurrent expenditures.

He added that the sum available to fund the federal government budget in 2022 is projected to decline by N969.09 billion.

He enjoined the legislative arm to make the proposed amendments without increasing the budget deficit.

“I urge you to roll back some of the N887.99 billion of projects earlier inserted in the budget by the National Assembly to accommodate these amendments.

“Total budget deficit is projected to increase by N1.01 trillion to N7.40 trillion, representing 4.01% of GDP. The incremental deficit will be financed by new borrowings from the domestic market.

“Given the urgency of the request for amendments, I seek the cooperation of the National Assembly for expeditious legislative action on the 2022 Appropriation Amendment Proposal in order to sustain the gains of an early passage of the budget,” Buhari stated.

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Economy

August 2023 Witnesses Highest Revenue Allocation of the Year – N1.1 Trillion Shared

The driving force behind this boost in revenue can be attributed to foreign exchange gains that have contributed significantly to the government’s income stream.

Published

2 days ago

September 30, 2023

Temitayo Olukoya

The Federation Account Allocation Committee (FAAC) unveiled its allocation of N1.1 trillion to the three tiers of government for the month of August 2023, Investors King reports.

This substantial increase was detailed in a communiqué following the committee’s latest meeting. August allocation was the highest so far with an increase of N133.99 billion when compared to the N966.11 billion shared in July 2023.

The driving force behind this boost in revenue can be attributed to foreign exchange gains that have contributed significantly to the government’s income stream.

Breaking down the N1.1 trillion total distributable revenue, the statement reveals that it consists of distributable statutory revenue amounting to N357.4 billion, distributable Value Added Tax revenue totaling N321.94 billion, Electronic Money Transfer Levy revenue at N14.10 billion, Exchange Difference revenue of N229.57 billion, and an augmentation of NN177.09 billion.

Of this impressive sum, the Federal Government is set to receive N431.25 billion, while the State governments will be allocated N361.19 billion, and the local government Councils will obtain N266.54 billion.

However, it’s essential to note that the total revenue available for August stood at N1.48 trillion, marking a 14% or 0.26 trillion decrease from the preceding month’s figure of N1.74 trillion.

The FAAC communiqué further underscores that various deductions were made, including N58.76 billion for the cost of collection, N254.05 billion for total transfers and refunds, and N71 billion allocated to savings. Additionally, the Excess Crude Account maintained a balance of $473,754.57.

The statement elaborated, “Gross statutory revenue of N891.934 billion was received for the month of August 2023. This was lower than the N1,150.424 billion received in July 2023 by N258.490 billion. The gross revenue available from the Value Added Tax was N345.727 billion. This was higher than the N298.789 billion available in July 2023 by N46.938 billion.”

Economy

Zambia’s Finance Minister Faces Dual Challenge in Upcoming Budget Address

Published

3 days ago

September 29, 2023

Samed Olukoya

As Zambia’s Finance Minister, Situmbeko Musokotwane, prepares to present the nation’s budget, he finds himself at a pivotal crossroads.

The second-largest copper producer in Africa is grappling with two pressing concerns: debt sustainability and soaring living costs.

Debt Restructuring Dilemma: Musokotwane’s foremost challenge is finalizing the $6.3 billion debt-restructuring deal with official creditors, led by China and France.

Delays have hindered disbursements from the International Monetary Fund (IMF) and left private creditors in limbo.

To reassure investors, a memorandum of understanding with the official creditor committee is urgently needed.

President Hakainde Hichilema emphasizes the importance of sealing these transactions to signal closure on this tumultuous chapter.

Plummeting Tax Revenue: The key copper-mining industry, which accounts for 70% of Zambia’s export earnings, is in turmoil.

First-half mining company taxes and mineral royalty collections have nosedived, adding to economic woes.

This, in turn, has depreciated the local currency, exacerbating imported inflation, particularly in fuel prices.

Rising Food Inflation: Musokotwane faces mounting political pressure to combat soaring living costs, with annual inflation reaching an 18-month high of 12%. Corn meal prices, a staple in Zambia, have surged by a staggering 67% in the past year.

Neighboring countries’ demand for corn has led to smuggling and further price spikes, raising concerns about food security.

Currency Woes: The kwacha’s value has been a barometer for the nation’s economic health. It depreciated by 16% since June 22, the worst performance among African currencies, reflecting the ongoing debt-restructuring uncertainty.

In his budget address, Musokotwane faces the daunting task of striking a balance between debt management, economic stability, and alleviating the burden on Zambia’s citizens.

The international community will keenly watch to see if his fiscal measures can steer the nation toward a path of recovery and prosperity.

Economy

IMF Urges Sub-Saharan African Nations to Eliminate Tax Exemptions for Fiscal Health

Published

4 days ago

September 28, 2023

Samed Olukoya

Sub-Saharan African countries have been advised by the International Monetary Fund (IMF) to tackle their fiscal deficits by focusing on eliminating tax exemptions and bolstering domestic revenue rather than resorting to fiscal expenditure cuts, which could hamper economic growth.

The IMF conveyed this recommendation in a paper titled ‘How to avoid a debt crisis in Sub-Saharan Africa.’

The IMF’s paper emphasizes that Sub-Saharan African nations should reconsider their overreliance on expenditure cuts as a primary means of reducing fiscal deficits. Instead, they should place greater emphasis on revenue-generating measures such as eliminating tax exemptions and modernizing tax filing and payment systems.

According to the IMF, mobilizing domestic revenue is a more growth-friendly approach, particularly in countries with low initial tax levels.

The paper highlights success stories in The Gambia, Rwanda, Senegal, and Uganda, where substantial revenue increases were achieved through a combination of revenue administration and tax policy reforms.

The IMF also pointed out that enhancing the participation of women in the labor force could significantly boost Gross Domestic Product (GDP) in developing countries.

The IMF estimates that raising the rate of female labor force participation by 5.9 percentage points, which aligns with the average reduction in the participation gap observed in the top 5% of countries during 2014-19, could potentially increase GDP by approximately 8% in emerging and developing economies.

In a world grappling with the weakest medium-term growth outlook in over three decades, bridging the gender gap in labor force participation emerges as a vital reform that policymakers can implement to stimulate economic revival.